Dec. 11, 2012 When it comes to four-year college degree attainment, a rising tide lifts all boats. According to research out this week from the University of Cincinnati, higher levels of college-degree attainment in an area boost the employment rate for all in that area. In fact, the least educated receive the biggest boost in terms of spillover effect.
For each 10 percent rise in the number of residents with a four-year college degree, the average overall employment rate in United States metropolitan areas rose by 2 percent between 1980 and the year 2000.
That employment rate rose higher for women (2.2 percent) vs. men (1.9 percent) and benefited some of the least educated the most dramatically.
For instance, every 10 percent rise in an area's four-year college degree attainment boosted the employment rate for women with either a high school diploma or even less education by 3.2 percent.
The research by John Winters, assistant professor of economics at the University of Cincinnati, "Human Capital Externalities and Employment Differences Across Metropolitan Areas of the USA," is published this week in the Journal of Economic Geography. It's research based on analysis of 1980 and year 2000 census data for those aged 25-55 years old from 283 metropolitan areas of the United States, a geographic area covering more than 80 percent of the U.S. population.
According to Winters, it's important to realize that even a 2 or 3 percent rise in employment for a population represents a large increase: "When we see the employment rate rise or fall by 1-, 2- or 3 percent for any group or area, that's making national news because it's a lot."
According to Winters, "It surprised me at first to find that the biggest, positive effects on employment went to the least educated as an area's college-degree attainment rises. However, some explanations can be found in the data itself about this spillover effect, especially the fact that women with a high school diploma or less benefited more than did men with a high school diploma or less. "
One explanation is that those earning higher levels of education and, thus, higher salaries were likely boosting local demand for and support of purchased services and amenities, everything from lawn care and child care to the arts and eateries. Said Winters, "Less-educated women benefited more from this spillover effect because they are more highly represented in certain sectors of the support and amenities portions of the labor force."
A second explanation is that people gain skills from working near highly educated workers, and this skill spillover increases the benefits of working.
Geographic Areas Where Higher Education Attainment Most Affected Employment
According to UC's Winters, mid-sized college towns and cities benefited the most in terms of overall employment effects based on four-year college degree attainment due to the fact that they generally contain an overall smaller population but one where higher proportions of residents have attended college and earned degrees. In these cases, the presence of a university is often the driver of educational attainment and thus, higher employment rates for all. He listed locales like Boulder, Colo.; Corvallis, Ore.; Ithaca, N.Y., Ann Arbor, Mich.; Lawrence, Kan., Iowa City, Iowa; and Ames, Iowa, as college towns with higher education levels that have much better employment outcomes than they otherwise would have.
But larger cities can also enjoy positive employment probability outcomes based on four-year degree attainment when higher proportions of the population have attained college degrees. In the upper tier of Winters' research findings were cities like Washington, D.C.; San Jose/San Francisco, Calif.; and Boston, Mass. These cities benefited in terms of overall rates of employment due to the higher percentages of residents with college degrees.
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- J. V. Winters. Human capital externalities and employment differences across metropolitan areas of the USA. Journal of Economic Geography, 2012; DOI: 10.1093/jeg/lbs046
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